Company Overview and History
Huntington Bancshares Inc (NASDAQ:HBAN) is a prominent regional bank holding company with a rich history dating back to 1866. Headquartered in Columbus, Ohio, the company has established a strong presence across the Midwest and surrounding regions, serving consumers, small and middle-market businesses, corporations, municipalities, and other organizations with a comprehensive suite of banking, payments, wealth management, and risk management products and services.
Huntington Bancshares Incorporated is a multi-state diversified regional bank holding company that was organized under Maryland law in 1966. The company's roots trace back to 1866 when The Huntington National Bank was first established. Throughout its history, Huntington has demonstrated resilience in the face of various challenges. In the early 2000s, the company successfully navigated the aftermath of the dotcom bubble burst and subsequent recession. During the 2008 financial crisis, Huntington maintained solid credit quality and capital levels, showcasing its ability to withstand economic downturns.
In recent years, Huntington has adapted to the changing landscape of banking by investing in digital banking capabilities to meet evolving customer needs. A significant milestone in the company's growth was the completion of its acquisition of TCF Financial Corporation in 2019, which expanded its geographic footprint. Huntington has consistently maintained strong capital and liquidity positions, providing stability during economic fluctuations. The company has also garnered recognition for its commitment to corporate social responsibility, receiving numerous awards for its community involvement.
Financials
As of September 30, 2024, Huntington Bancshares boasted $200.53 billion in total assets, making it a sizable player in the banking industry. The company's key financial metrics for the nine-month period ended September 30, 2024, include:
- Net Income: $1.41 billion - Total Revenue: $5.47 billion - Net Interest Income: $3.95 billion - Noninterest Income: $1.48 billion - Operating Cash Flow: $331 million - Free Cash Flow: $7.33 billion
For the most recent quarter (Q3 2024), Huntington reported:
- Revenue: $2,555 million (10% increase year-over-year) - Net Income: $517 million (5% decrease year-over-year) - Operating Cash Flow: -$438 million - Free Cash Flow: -$480 million
Huntington Bancshares' strong financial performance is underpinned by its diversified business model, which encompasses commercial and consumer banking, payments, wealth management, and capital markets activities. The company's balanced approach to revenue generation has enabled it to weather market fluctuations and maintain consistent profitability.
Growth Strategies and Performance
One of the key drivers of Huntington Bancshares' success has been its relentless focus on organic growth. The company has strategically invested in expanding its geographic footprint, with a recent announcement of a full franchise and branch expansion into the Carolinas. This move builds upon the company's earlier investments in commercial and regional banking teams across new and existing markets, positioning Huntington Bancshares for continued growth and market share gains.
Moreover, Huntington Bancshares has made a concerted effort to strengthen its fee-based businesses, particularly in the areas of payments, wealth management, and capital markets. In the third quarter of 2024, the company reported a 12% year-over-year increase in core fee revenues, driven by robust performance in these strategic focus areas. This diversification of revenue streams has helped the company mitigate the impact of interest rate fluctuations and maintain a healthy balance sheet.
Credit Quality and Risk Management
Despite the challenging macroeconomic environment, Huntington Bancshares has demonstrated a strong grasp of managing its credit quality. The company's net charge-offs remained stable at 30 basis points in the third quarter of 2024, reflecting its disciplined underwriting standards and prudent risk management practices. Additionally, the company's allowance for credit losses stood at 1.93% of total loans and leases, further reinforcing its commitment to maintaining a robust and well-capitalized balance sheet.
Liquidity
Huntington Bancshares' capital position remains solid, with a common equity Tier 1 (CET1) ratio of 10.4% as of September 30, 2024. The company's tangible book value per share has also increased by 21.5% year-over-year, underscoring its ability to generate value for its shareholders.
Future Outlook and Guidance
Looking ahead, Huntington Bancshares remains optimistic about its future prospects. The company has provided guidance for the fourth quarter of 2024, expecting accelerating loan growth of approximately 4% to 5% year-over-year and deposit growth between 4% and 5% year-over-year. Additionally, the company anticipates core fee revenues to grow at approximately 8% to 9% year-over-year in the fourth quarter, driven by the continued momentum in its strategic focus areas.
For the full year 2024, Huntington's expectations remain unchanged from their prior guidance. Full-year net interest income is expected to be within their prior guidance range, with Q4 net interest income expected to be flat to up 1% year-over-year. Growth is then expected to resume in the first half of 2025 and accelerate in the second half. Core expenses are projected to grow around 3% year-over-year in Q4, subject to some variability. Credit quality is expected to remain strong, with net charge-offs projected to be relatively similar to Q3.
Looking further ahead to 2025, Huntington expects to deliver record net interest income based on current rate curve expectations.
However, Huntington Bancshares is not immune to the broader macroeconomic risks and regulatory challenges faced by the banking industry. The company's performance could be impacted by factors such as interest rate volatility, economic downturns, changing consumer preferences, and evolving regulatory requirements. Investors should carefully evaluate these potential risks when considering an investment in Huntington Bancshares.
Business Segments
Huntington Bancshares operates through three main business segments:
Consumer Regional Banking Segment: This segment focuses on providing a full range of banking products and services to consumer customers through Huntington's branch network, online banking platforms, and mobile applications. It includes residential mortgage, automobile, home equity, RV and marine, and other consumer loans and leases. During the nine-month period ended September 30, 2024, this segment reported net income of $1.10 billion, an increase of 14% compared to the year-ago period. The increase was primarily driven by a 10% increase in net interest income due to growth in average loans and leases and a 16 basis point increase in the net interest margin. Noninterest income also increased 2% due to higher wealth and asset management revenue, payments and cash management revenue, mortgage banking income, and customer deposit and loan fees.
Commercial Banking Segment: This segment provides a wide array of products and services to middle market, large corporate, real estate, and government public sector customers. It includes commercial and industrial loans, commercial real estate loans, and lease financing. For the nine-month period ended September 30, 2024, the Commercial Banking segment reported net income of $853 million, a decrease of 9% compared to the year-ago period. The decrease was primarily due to a 4% decline in net interest income driven by a 2% decrease in average loans and leases and an 8 basis point decline in the net interest margin. Noninterest income increased 2%, largely from higher capital markets and advisory fees, commitment and other loan fees, and payments and cash management fees, partially offset by lower leasing revenue.
Treasury Other Segment: This function includes revenue and expense related to assets, liabilities, derivatives, and equity not directly assigned or allocated to the Consumer Regional Banking or Commercial Banking segments. It includes the impact of Huntington's funds transfer pricing methodology, investment securities portfolios, and other unallocated items. For the nine-month period ended September 30, 2024, the Treasury Other segment reported a net loss of $541 million, an increase in net loss of $348 million compared to the year-ago period. This was primarily driven by a $383 million decrease in net interest income due to a higher cost of funds, partially offset by a $120 million increase in provision benefit for income taxes.
Conclusion
Overall, Huntington Bancshares has demonstrated its ability to navigate challenging market conditions and deliver consistent financial performance. The company's diversified business model, focus on organic growth, and disciplined risk management approach have positioned it well to capitalize on future opportunities and continue its legacy as a leading regional banking powerhouse. With strong performance across its business segments and positive guidance for the future, Huntington Bancshares appears well-positioned for continued success in the competitive banking industry.